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ME property investors 'adopt cautious approach'

Dubai, October 6, 2008

The demand-supply dynamic in real estate sector remains positive across Middle East region, however, against the backdrop of credit crisis regional investor sentiment is leaning towards a more cautious approach, according to a report.

The report, compiled by Colliers International, is the first and most comprehensive regional overview of its kind, providing comparative key performance indicators across 10 markets in the Mena.

Extracted from Colliers’ in-depth research studies into the office, residential, retail and hospitality sectors, the overview highlights the regional and local factors affecting real estate markets in Dubai, Abu Dhabi, Riyadh, Cairo, Doha, Muscat, Amman, Damascus, Khartoum and Tripoli.

Investment activity will shift in focus to properties where quality of product, location strength, supporting leisure and commercial amenities and effective facility management meet end-user requirements, the global real estate consultancy says in the report.

The Colliers report, which reveals some interesting insights for the Mena region, comes at a time when investors from around the globe are in Dubai for Cityscape.

It is the only report to offer comparative data on average rents, average sales price, yield, and occupancy rate as well as Colliers’ outlook until 2010.

“We believe that the Mena region remains an area of strong potential for real estate investment comparative to other global markets,' explained Ian Albert, Colliers regional director.

'However, we do foresee a return to fundamentals, especially in the more advanced markets, where strongly differentiated developers with a view to the end-user able to satisfy the market will be best placed to deal with any market correction,' he noted.
 
Despite differences in socio-economic, demographic and regulatory factors between the markets, the overview highlights common themes: economic diversification funded by petrodollar liquidity, improvements in regulatory and institutional frameworks, developments shifting from public municipalities to individual (though often government-owned) developers, and the increased demand for and supply of leisure and high-end developments. 

Common risks include a focus on premium products, an increasing scope for a supply glut caused by copy-cat developments, inflated market speculation and barriers to end-user participation which include entry level prices and access to finance.

'Across the regional property markets we’ve seen a case of ‘bandwagon investment’ where secondary tier developers seek to replicate the success of first movers by building similar products en masse.'

'In the current climate market segmentation and product differentiation will be key. We expect those developers that establish themselves as strong brands and deliver quality products should outperform their competitors,' said Albert.-TradeArabia News Service




Tags: Crisis | cautious | Colliers | Regional investors |

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